The EUR/USD pair yesterday confirmed the break out of the sideways range perceived between 1.2460 and the 1.2160 zone. Initial jobless claims were practically in line with expectations (but strong). More interestingly some data, the GDP price deflator and PCE price index, were revised upwardly. As this shows some inflation, the derived concern on a sooner than expected Fed hike, should have helped the USD logically, but since that didn't really come true, some dollar bulls must have been disappointed, threw in the towel and EUR/USD choose to go slightly up to the 1.2180 zone.
This morning, the EUR/USD pair stayed in more calm waters, circling the 1.2130 zone. The break lower (below 1.2160 on Wednesday and confirmed
yesterday) in our opinion opens up a short-term downward path for EUR/USD towards a true
test at the 1.2050-to-1.2000 zone, which should be a very difficult area to break for now.
ČSOB Investment Research